Google as Phone Carrier Theory Mostly Well-Received

eWEEK started the new year by skewering the popular, but quite speculative
notion that Google could become a phone carrier, offering these five reasons why this wouldn't happen.

To say nothing about the costs associated with such a move, we believe
incumbent carriers, Congress, privacy advocates, consumers and an already
competitive market would preclude this high-minded vision.

Several anonymous readers then set out to prove us wrong. Many
consumers, it seems, would love the idea as having Google as their carrier.

Some believe the carriers, such as Verizon and AT&T, can use a kick in
the pants from a new disruptive entrant in the market. They trust Google more
than the carriers, and spat back the tried and true "there is no such
thing as too many choices" argument.

But the biggest argument seemed to come down to cost. Most folks believe
Google, which already offers its Google Voice application for free, would offer them phone
service on the cheap with a Nexus-branded phone lacking carrier bloatware.

One reader wrote:

"Google offers value period! AT&T and Verizon and to some extent
the other two small providers are working to keep wireless communications
prices inflated. They manipulate prices by shoehorning you into tiered voice, data
and text plans. Google will simplify this into one value oriented data stream
that will handle all of voice, Internet and text data. And Google will allow
you to have an unlocked Android phone that will be sold on any retail store at
commodity prices."

Another noted:

"Imagine what Google could bring to the table. First, greatly reduced
prices. Imagine a cell phone with 3G & 4G data that costs maybe $20/mo,
with the option of a bucket of minutes or pay-as-you-go minutes. Google could
do that. Imagine them integrating their Google Voice features into cell phones.
(For one, imagine being able to block annoying callers easily) They could bring
features that the masses are clamoring for that incumbents refuse to provide.
For example, how many of us would like to have the ability to block all callers
who either block or do not send their caller ID data?"

We don't know if the respondents are huge Google fans or just so sick of
carrier domination or both, but we brought in some analysts to help provide
some edification.

Matt Davis, who covers consumer and multiplay services for IDC,
noted that Google would have to prove to shareholders that becoming a carrier
would be in their best interest.

"This is highly unlikely to happen," Davis
said. Then come the practical roadblocks. Davis
pointed to the fact that Google lacks the wireless spectrum necessary to
provide mobile phone service.

The company may have had its best chance to become a carrier when the 700MHz
spectrum went up for auction two years ago. Verizon swooped in and outbid
everyone for it and has now cultivated its 4G LTE network with the spectrum.

Ultimately, he said it would take some serious bandwidth-squeezing by mobile
operators to force Google to seriously entertain the notion.

"As far as building an access network ... dirty, low-margin, hard
business. That is not how Google makes their money. They'd be very effective in
delivering a strong lobby to the Obama administration and FCC [Federal
Communications Commission] to make sure there is enough freedom and openness at
the network access layer that they don't have to do that."

But what about Google's Fiber network, the ambitious plan to test a network
that brings a speedy 1G-bps Internet service to peoples' homes?

Davis called Google Fiber a
stunt, arguing that it was to counter the fixed wireline carriers' argument
that building a fiber network was expensive and hard to do. The move was purely
designed to show that these carriers have either been incompetent or
intentionally restricting bandwidth.

But we're still talking at least $20 billion in infrastructure costs to
build out a full network. Buying a carrier such as Sprint, with a market cap of
$13.3 billion, or even the struggling Clearwire, might be a better option.

Enderle Group's Rob Enderle noted that carriers might not be able to stop
Google if it wants to go the carrier route.

"Google has their own lobbyists now, and the current administration
isn't a huge fan of the current carriers while being very
pro-competition," Enderle said.

Of course, Verizon and AT&T spend a lot more than Google lobbying the
government each year, but Enderle said the government (read: the FCC) might
promote a new provider. "Their work with the existing carriers and net
neutrality hasn't been very promising, and Google could help them fix
that."

Enderle concluded: "For Google the problem is too many fronts and
getting too close to being a real monopoly or falling under existing
regulation. They aren't huge fans of either, and it is likely those concerns
that are holding them back."

There you have it. Anyone still think the Google as carrier notion has some
steam behind it?